Are you interested in investing in gold ETFs? Well, it is a good option for investors looking to diversify their investment portfolio and get higher returns. Investing in gold ETFs has grown in recent years. Investors in India appear keen to explore the opportunities offered by the precious metal market without the risks of holding the physical commodity. However, before you enter the gold ETF market, it would help if you know about the best gold ETFs in India.
This will help you invest wisely and ensure that you can make the most out of your investments. In this blog post, we will discuss which gold ETFs are best, the advantages, and benefits of investing in gold ETFs, and things to consider while investing.
What are gold ETFs?
If you are wondering which gold ETF is the best or what is the average gold ETF price, you should begin with the basics and learn what are gold ETFs. Gold ETFs are a type of investment fund traded on exchanges. In India, SEBI (Securities and Exchange Board of India) regulates gold EFTs. ETFs are offered by various mutual fund companies. Gold EFTs are designed to track gold prices and offer investors returns that usually replicate the market price of physical gold.
List of the 5 best gold ETFs in India
| Best Gold ETFs in India | Market Cap (in Rs.) |
| GOLDBEES | 5,168.88 Cr |
| HDFCGOLD | 1,906.09 Cr |
| AXISGOLD | 319.17 Cr |
| BSLGOLDETF | 669 Cr |
| KOTAKGOLD | 3,161 Cr |
Overview of the 5 best gold ETFs in India
If you are searching for the best gold ETFs for your investment, keep reading. Below, we have listed the five best gold EFTs based on metrics such as market cap, NAV, risks, and minimum lump-sum investment.
GOLDBEES
If you are wondering which gold ETF is best for your investment, you could consider GOLDBEES. It is one the best gold ETFs, offered by Nippon India Mutual Fund, formerly, Reliance Mutual Fund. It is also one of the largest and oldest gold EFTs available in India. GOLDBEES has always maintained a significant dominance in the market since its inception.
- Market Cap: Rs. 5,168.88 Cr
- Fund Name: NIPPON INDIA ETF GOLD BEES
- Expense Ratio: 0.79%
- Risk: High risk
- NAV: Rs.55.39
- AUM: Rs.8,929 crore
- Minimum lump sum investment: Rs.10,000
ETF returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 11.38 | 41.63 | 97.12 |
Note: Based on Cumulative Return
HDFCGOLD
HDFCGOLD is a prominent name in the list of top gold ETFs. This gold ETF is managed and maintained by HDFC Mutual Funds. Also, it is one of the leading gold ETFs in terms of assets under management. HDFCGOLD offers investors an opportunity to diversify their investment portfolio by investing in various sectors of the Indian economy. Hence, it makes a great choice for growth-oriented long-term investors in India.
- Market Cap: Rs. 1,906.09 Cr
- Fund Name: HDFC Gold Exchange Traded Fund
- Expense Ratio: 0.59%
- Risk: High risk
- NAV: Rs.57.36
- AUM: Rs.4,118 crore
- Minimum lump sum investment: Rs.5,000
ETF returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 11.91 | 42.29 | 97.47 |
KOTAKGOLD
You can consider investing in KOTAKGOLD, the gold ETF managed by Kotak Mutual Funds. Thanks to its remarkable record of offering high returns to investors, it stands out from other popular gold ETFs. Besides, the ETF share price is also quite competitive, making it an ideal choice for investors looking to secure high returns from their investments.
- Market Cap: Rs. 3,161 Cr
- Expense Ratio: 0.55%
- Risk: High risk
- NAV: Rs.55.67
- AUM: Rs.3,261 crore
- Minimum lump sum investment: Rs.100
ETF returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 11.36 | 41.57 | 97.69 |
AXISGOLD
AXISGOLD, managed by Axis Mutual Fund, figures in our list of the best gold ETFs in India that you can consider investing in. AXISGOLD seeks to maximize returns as it focuses on strategic investment and follows an active risk mitigation approach. Due to its proactive adherence to rigorous investment principles, it makes an ideal option for investors looking for high returns with an effective risk management approach.
- Market Cap: Rs. 319.17 Cr
- Fund Name: Axis Gold ETF
- Expense Ratio: 0.56%
- Risk: High risk
- NAV: Rs.56.18
- AUM: Rs.796 crore
- Minimum lump sum investment: Rs.5,000
ETF returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 11.62 | 42.07 | 97.86 |
BSLGOLDETF
BSLGOLDETF is considered one of the best gold ETFs in India. The gold ETF is managed by Birla Sun Life Mutual Fund. The gold ETF fund is primarily known for its prudent investment strategies and expert management approach.
- Market Cap: Rs. 669 Cr
- Expense Ratio: 0.54%
- Risk: High risk
- NAV: Rs.58.55
- AUM: Rs.675 crore
- Minimum lump sum investment: Rs.5,000
ETF returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 11.93 | 41.01 | 97.13 |
Top Gold ETFs in India ( Based on 1-yr Return )
| Top Gold ETFs in India | Market Cap(Rs. Cr) | 1 Year Return |
| UTI Gold Exchange Traded Fund | 919 | 12.08 |
| SBI-ETF Gold | 2114.57 | 11.93 |
| Aditya BSL Gold Exchange Traded Funds | 669 | 11.93 |
| HDFC Gold Exchange Traded Fund | 1,906.09 | 11.91 |
| IDBI Gold Exchange Traded Fund | 110 | 11.87 |
| ICICI Prudential Exchange Traded Funds | 4894.32 | 11.63 |
| Axis Gold Exchange Traded Funds | 319.17 | 11.62 |
| Nippon India ETF Gold BeES | 5,168.88 | 11.38 |
| Kotak Gold Exchange Traded Funds | 3,161 | 11.36 |
| Invesco India Gold Exchange Traded Fund | 102.91 | 11.15 |
Top Gold ETFs in India ( Based on 5-yr Return )
| Top Gold ETFs in India | Market Cap (Rs. Cr) | 5 Year Return |
| SBI-ETF Gold | 2114.57 | 101.87 |
| Invesco India Gold Exchange Traded Fund | 102.91 | 101.87 |
| IDBI Gold Exchange Traded Fund | 110 | 100.89 |
| Kotak Exchange Traded Funds | 3,161 | 98.29 |
| Axis Exchange Traded Funds | 790 | 97.86 |
| HDFC Gold Exchange Traded Fund | 1,906.09 | 97.47 |
| Aditya BSL Gold ETF | 669 | 97.13 |
| Nippon India ETF Gold BeES | 5,168.88 | 97.12 |
| UTI Gold Exchange Traded Fund | 861.28 | 96.61 |
| ICICI Prudential Gold ETF | 4894.32 | 96.39 |
Advantages of investing in best gold ETFs
If you want to invest in the best ETFs in India, you should know the benefits these schemes offer.
Cost-effective
Gold ETFs come with a lower expense ratio compared to physical gold or actively managed mutual fund schemes as these funds do not incur expenses related to security, insurance, and storage of physical gold. This reduces the overall investment cost of gold ETFs.
Liquidity
In gold ETFs, investors can trade throughout the market hours, allowing them easy access to funds and capitalize on price movements. Liquidity is another plus point of gold plans in India.
Transparency
To understand gold ETF share price in India, investors must track the real-time price of their investment. The most important benefit of investing in the gold ETFs in India is that they offer transparent information about holdings and prices.
Tax efficiency
Gold exchange-traded funds are taxed as capital assets, while physical gold usually has making charges and wealth tax. Gold ETFs are tax-efficient and offer enhanced investment returns.
Accessibility
Owing physical bullion creates logistical challenges for investors. Gold ETFs reduce these hurdles and help traders gain exposure to gold investment.
How gold ETFs work
Gold ETFs allow traders to invest in gold without owning physical gold. It functions more like a mutual fund. Rather, it tracks the price of gold. In other words, investors invest in gold bullion indirectly. The gold ETF share price is linked to the price movement of physical gold in the market.
Gold ETF price fluctuates according to the price movement of physical gold. Investors can trade gold exchange-traded funds units on the stock exchange that offer more liquidity than physical gold.
Things to consider before investing in the best gold ETFs in India
Investing in the best gold ETFs in India can be beneficial, but you should consider several factors before investing in gold exchange-traded funds.
Expense Ratio
Comparing the expense ratios of different gold ETFs is important. Schemes with lower expense ratios enhance investment returns.
Market Conditions
Keep tracking gold prices and market conditions to make informed investment decisions. To ensure maximum investment returns, one should invest in gold ETFs when there is a price drop.
Tracking Error
Observing tracking errors of gold ETFs is also important. A lower gold ETF tracking error means the performance of gold prices in the market is closely mirrored by the scheme.
Liquidity
Another important factor to consider is the liquidity of your chosen gold ETF. Higher liquidity indicates that there is enough trading volume.
Net Asset Value (NAV)
Comparing the NAV or per-share value of a gold ETF fund with the market price helps investors understand if a scheme is available at a discounted or premium rate.
Assets Under Management (AUM)
The AUM reflects the total value of assets a fund has. A higher AUM indicates liquidity and investor confidence in gold ETFs.
How to invest in the best gold ETFs
By now, you would have a fair idea of which gold ETF is best. Now, it is time to learn the steps involved in investing in gold exchange-traded funds in India.
Step 1
The first and most important step to invest in gold ETFs in India is to open a DEMAT and an online trading account. For this, one must consult a stockbroker.
Step 2
The second step is to access your trading account via your broker’s online trading portal. Use your Login ID or Password to access your trading account.
Step 3
Search for gold ETFs for investment. You can invest a lump sum for a one-time investment or you can invest through systematic SIPs.
Step 4
Another important step is to choose a specific unit of gold ETF units and place a buy order to make your purchase.
Step 5
You will receive a confirmation message of the order placed on your registered Email ID or mobile number.
Step 6
Once you have placed your order, a small fee will be debited from your linked bank account.
Gold ETF vs. Physical Gold
| Aspect | Gold ETF | Physical Gold |
| Ownership | It represents ownership of gold in electronic form. | The ownership of physical gold as bars, coins, and jewelry. |
| Liquidity | ETFs offer higher liquidity as they are easily tradable on stock exchange platforms. | Physical gold offers less liquidity as it takes time to sell gold in the market. |
| Accessibility | Gold ETFs are relatively easily accessible as they are purchased and sold via brokerage accounts. | Physical gold can be accessed by visiting a jeweler or a bullion dealer. |
| Transparency | The pricing and holding information are transparent. | Appraisal and verification play an important role in setting the value. |
| Tax treatment | It is taxed as a capital asset as it is subject to capital gains. | In physical gold, taxation varies based on the law and holding duration. |
| Cost | It offers lower expense or cost when compared to physical gold | It involves additional costs due to charges, insurance, and storage fees. |
| Risk Management | It works as a hedge against currency devaluation and inflation. | Physical gold is risky as it can be stolen. |
| Storage | Gold is stored securely by the fund custodian. | It requires safe storage at a bank vault or home, leading to higher storage costs. |
Conclusion
ETFs offer a great opportunity for investors to diversify their portfolios. Gold ETFs offer investors exposure to the yellow metal without the risk of owning physical gold. However, it is important to pick the best gold ETFs by analyzing their market performance, liquidity, and management quality. We have discussed some of the best gold ETFs in India and everything you need to know before getting started with gold ETF investments.
